ABSTRACT
This chapter considers the overwhelming movement presently driving towards corporate social responsibility. Bridging the great divide between corporate governance and corporate social and environmental responsibility is the next great challenge for business. Corporate social responsibility has many interpretations, but essentially is based on a realisation that the wasteful and exploitative practices of industry in the past can no longer be afforded by people or the planet. It is just not sustainability that is currently at issue – it is survival. The publication of the Stern review on The Economics of Climate Change (2006) has helped to propel the business world into an urgent recognition of the dramatic consequences of unrestrained industrial activity, and how little time there is to attempt to put things right (Figure 8.1). Business corporations will respond, or will be made to respond by shareholders, stakeholders and government, to the demand that they act with greater responsibility in their use of resources and impact on the community and environment. The legitimacy of corporate social responsibility is examined in this chapter from a governance perspective firstly in terms of enlightened shareholder value, and the duty to promote the success of the company, and secondly in terms of responsible investment, and the potential of socially responsible investment strategies. An examination of the increasing sophistication of corporate reporting of social and environmental matters is made. The conclusion is that only a fundamental redesign of corporate forms, objectives and value measures can fully meet the realities of responsibility.
